Posted by When I talk to budding entrepreneurs or students of the subject Business Plan, I often hear that they plan to have as many products or services as possible in their offerings. With products it’s still not so bad – if they are well cataloged and easy to sell, there can be a lot of them. With services it’s worse – when I ask what the basic version of a service should look like and how much it should cost, there is silence or the answer falls: it depends.
Then I’m reminded of Steve Jobs’ saying – we are equally proud of what we do and what we don’t do. Therein lies the power of focusing on specifics, a prerequisite for any business.
Check out this lecture by Steve Jobs and everything will become clear:
So how to focus on specifics?
The basic concept in any marketing-mix is assortment. This is the collection of products or services offered by your company. An assortment has depth and breadth. For example, if you run a cosmetics store and sell soaps, hair shampoos and creams there, these three types of products are the breadth of the assortment. The depth of the assortment is the types of soaps (liquid, bar), shampoos (for normal hair, brittle hair, oily hair) and creams (day, night). If you just look at this simple example, you will notice that you already have 7 different products in your store, not counting different manufacturers! Depth times width – this gives you the size of your assortment.
Imagine you have the ambition to run a well-stocked cosmetics store. Increasing the width to 15 types of products, each in 8 types from 5 manufacturers, you will quickly have 600 different products in your assortment! Is this really what you want? Ask yourself just two supporting questions to answer whether you really want this.
First, will you know enough about these 600 products that when a customer comes to you and asks which one to buy, you will advise them and they will be satisfied with their decision?
Second, will you really sell all of the 600 products well enough to make it worth your while?
The answer to both questions is always no.
It’s even worse with services. Products you can set yourself on a shelf, they have some color, shape, packaging. Alternatively, you can learn how to use them, you can memorize the instruction manual, you can check them yourself. But how to concretize hundreds of services? This is simply impossible!
In a separate blog post I will describe what the method of concretizing a service is, but for now I want to give you a clear message – if you want to run a service business, then the types of services (the breadth of the assortment) must be as few as possible, so that the customer can understand what he will be paying for, and so that you can figure it out yourself and… count the price of the service. The depth of the assortment, i.e. the number of versions, is not so important, although you shouldn’t overdo it either. The point is that you should be able to embrace these services with your mind, understand what is most important in them and be able to explain it to the customer.
Finally, an important question: how do you deal with services that are yet to be created when a potential customer comes in and explains what they want? The simple answer: you need to be prepared for this and design some standard services in advance. I will describe the details in next weeks blog.